1.

Professional skepticism requires that the auditor assume that management is

a. reasonably honest
b. Neither honest nor dishonest
c. Not necessarily honest
d. Dishonest unless proved otherwise

2. Which of the following information should a successor auditor obtain during the inquiry of the
predecessor auditor before accepting engagement?
i. Information about integrity of management
ii. Disagreement with management concerning auditing procedures
iii. Review of internal control system.
iv. Organisation structure
a. (i) and (ii)
b. (ii) and (iii)
c. (i) , (ii) and (iii)
d. i) and (iii)

3. The audit engagement letter, generally, should include a reference to each of the following
except
a. limitations of auditing
b. responsibilities of management with respect to audit work
c. expectation of receiving a written management representation letter.
d. a description of the auditor’s method of sample selection.

4. The use of an audit engagement letter is the best method of assuring the auditor will have
which of the following?
a. Auditor will obtain sufficient appropriate audit evidence.
b. Management representation letter
c. Access to all books, accounts and vouchers required for audit purpose
d. Cooperation from other auditors

5. The use of an audit engagement letter is the best method of documenting

i. the required communication of significant deficiencies in internal control
ii. significantly higher control risk than that assessed in prior audit.
iii. Objective and scope of auditor’s work
iv. Notification of any changes in the original arrangements of the audit.
a. (i) and (ii)
b. (i) and (iii)
c. (ii) and (iv)
d. (iii) and (iv)

6. An auditor who accepts an audit but does not possess the industry expertise of the business
entity should
a. engage experts
b. obtain knowledge of matters that relate to the nature of entity’s business
c. inform management about it
d. take help of other auditors

7. An auditor obtains knowledge about a new client’s business and its industry to
a. Make constructive suggestions concerning improvements to the client’s internal control
system.
b. Evaluate the appropriateness of audit evidence obtained
c. Understand the events and transactions that may have an effect on client’s financial statements.
d. All of the above

8. The Ghana Government had constructed six bungalows for its ministers. They are lying
unoccupied for last three years. This would be a matter of concern for
a. Propriety Auditor
b. Performance Auditor
c. Financial Auditor
d. None of the above

9. The board of directors shall appoint first auditor of a company

a. Within one month of completion of capital subscription state of the company
b. Within one month of the promotion of the company
c. Within one month of the commencement of the business of the company
d. Within one month of incorporation of the company

10. The term of the auditor-ship of first auditor would be from the date of appointment till …….
a. the conclusion of statutory meeting
b. the conclusion of first annual general meeting
c. the conclusion of next annual general meeting
d. the date of removal

11. In case the directors fail to appoint first auditor (s), the shareholders shall appoint them
at …………......... by passing a resolution
a. a general meeting
b. first annual general meeting
c. statutory meeting
d. annual general meeting

12. Which of the following statement is not true regarding appointment of statutory auditor by
the Central Government?
a. Such powers have been conferred upon it by section 224(3)
b. If a company fails to appoint an auditor at a general meeting
c. If an auditor refuses to accept appointment, the powers of the Central Government can be
exercised.
d. None of the above

13. If a casual vacancy in the office of auditor arises by his resignation it should only be filled by
the company in a……..
a. Board meeting
b. extraordinary general meeting
c. General meeting
d. annual general meeting

14. The auditor of a Government company is appointed by the C & AG Ltd. His remuneration is
fixed by ……………………………….
a. the C & AG Ltd
b. the shareholders
c. the shareholders at an annual general meeting
d. the board of directors

15. The authority to remove the first auditor before the expiry of term is with …………………..
a. the shareholders in a general meeting
b. the shareholders in the first annual General meeting
c. the board of directors
d. the Central Government

16. Which of the following statements is not correct regarding removal of first auditor before
expiry of the term?
a. He is removed at a general meeting
b. The shareholders are authorized to do so
c. The approval of the Central Government is required for such removal
d. The provisions for such removal are contained in the companies’ code

17. The retiring auditor does not have a right to …………………………

a. make written representations
b. get his representations circulated.
c. be heard at the meeting
d. speak as a member of the company

18. Who out of the following cannot be appointed as a statutory auditor of the company?
a. Erstwhile director
b. Internal auditor
c. Relative of a director
d. Only (b) and (c)

19. A statutory auditor has a right of access at all times to

a. Books and accounts of a company
b. Books, accounts and documents of the company
c. Books, accounts and vouchers of the company
d. Notices and documents of the company

20. The auditor has a right to

a. Obtain information and explanation
b. Obtain information and explanation from the employees and officers
c. Obtain information and explanation necessary for the purpose of audit
d. All the above

21. The auditor is appointed by

a. Shareholders in an annual general meeting
b. Shareholders in general meeting
c. Board of directors in board meeting
d. Any of the above

22. Auditor of a ………… company does not have right to visit foreign branches of the company
a. Unlimited liability
b. Manufacturing
c. Banking
d. Nonprofit making

23. Who among the following can be appointed as special auditor by the Central Government?
a. The statutory auditor
b. chartered accountant in practice
c. Any chartered accounted who is not in practice
d. Both (a) and (b)

24. The independence of an internal auditor will most likely be assured if he reports to the
a. President Finance
b. President System
c. Board Chairman
d. Managing Director

27. The audit committee of a company must be made up of:

a. Representatives from the client’s management, investors, suppliers, and customers.
b. The audit partner, the chief financial officer, the legal counsel, and at least one outsider.
c. Representatives of the major equity interests, such as preferred and common stockholders.
d. Members of the board of directors who are not officers or employees.

28. Which of the following should not normally be included in the engagement letter for an audit?
a. A description of the responsibilities of client personnel to provide assistance.
b. An indication of the amount of the audit fee.
c. A description of the limitations of an audit.
d. A listing of the client’s branch offices selected for testing.

29. Which of the following should the auditors obtain from the predecessor auditors before
accepting an audit engagement?
a. Analysis of balance sheet accounts.
b. Analysis of income statement accounts.
c. All matters of continuing accounting significance.
d. Facts that might bear on the integrity of management.
30. The audit engagement letter, generally, should include a reference to each of the following
except
a. limitations of auditing
b. responsibilities of management with respect to audit work
c. expectation of receiving a written management representation letter.
d. a description of the auditor’s method of sample selection.

31. The use of an audit engagement letter is the best method of assuring the auditor will have
which of the following?
a. Auditor will obtain sufficient appropriate audit evidence.
b. Management representation letter
c. Access to all books, accounts and vouchers required for audit purpose
d. Cooperation from other auditors

32. The use of an audit engagement letter is the best method of documenting
i) the required communication of significant deficiencies in internal control
ii) significantly higher control risk than that assessed in prior audit.
iii) Objective and scope of auditor’s work
iv) Notification of any changes in the original arrangements of the audit.
a. (i) and (ii)
b. (i) and (iii)
c. ii and (iv)
d. (iii and (iv)

33. An auditor who accepts an audit but does not possess the industry expertise of the
business entity should
a. engage experts
b. obtain knowledge of matters that relate to the nature of entity’s business
c. inform management about it
d. take help of other auditors

34. Who is responsible for the appointment of statutory auditor of a limited company?
a. Directors of the company
b. Members of the company
c. The Central Government
d. All of the above

36. Who out of the following cannot be appointed as a statutory auditor of the company?
a. Erstwhile director
b. Internal auditor
c. Relative of a director
d. Only (b) and (c)

37. A statutory auditor has a right of access at all times to

a. Books and accounts of a company
b. Books, accounts and documents of the company
c. Books, accounts and vouchers of the company
d. Notices and documents of the company

38. The auditor has a right to

a. Obtain information and explanation
b. Obtain information and explanation from the employees and officers
c. Obtain information and explanation necessary for the purpose of audit
d. Both (b) and (c)

39. Which of the following has primary responsibility for the fairness of the representations made
in financial statements?
a. Client’s management.
b. Independent auditor.
c. Audit committee.
d. AICPA.

40. An auditor who accepts an audit but does not possess the industry expertise of the business
entity should
a. engage experts
b. obtain knowledge of matters that relate to the nature of entity’s business
c. inform management about it
d. take help of other auditors

41. Auditors conduct auditing in accordance with:

a. International Financial Reporting Standards
b. Local pronouncements/Legislations
c. Financial Accounting Standards Board
d. All of the given options

42. True and fair presentation means that the financial statement are prepared and presented in
accordance with the requirements of the applicable International Financial Reporting Standards
(IFRS) and local pronouncements/legislations.
Which of the following primary assertions is satisfied when an auditor ensures that there are no
unrecorded assets, liabilities, transactions or events or undisclosed items in the client s financial
records?
a. Valuation
b. Completeness
c. Existence
d. Rights and obligations

43. External audit of the accounts of a limited company is required

a. because it is demanded by the company’s bankers
b. at the discretion of the shareholders
c. to detect fraud
d. by the Companies Code
44. The goal of corporate governance and business ethics education is to
a. Teach students their professional accountability and to uphold their personal Integrity to
society.
b. Change the way in which ethics is taught to students.
c. Create more ethics standards by which corporate professionals must operate.
d. Increase the workload for accounting students.

45. The internal audit function is least effective when the department:
a. Is non-independent.
b. Is competent.
c. Is objective.
d. Exhibits integrity

46. An independent director is one who:

a. Did not attend a school supported by the company.
b. Does not have outside relationships with other directors.
c. Does not have any other relationships with the company other than his or her directorship.
d. All of the above.

47. Internal auditors are responsible to:

a. the board of directors.
b. management.
c. both a and b.
d. neither a nor b.

48. When an auditor is proposed for removal from office, which one of the following is he
NOT permitted to do?
a. Circulate representations to members
b. Apply to the court to have the proposal removed
c. Speak at the AGM/EGM where the removal is proposed
d. Receive notification of the AGM/EGM where the removal is proposed

49. Which one of the following is NOT a duty of the auditor?

a. Duty to report to the company’s bankers
b. Duty to report to the members
c. Duty to sign the audit report
d. Duty to report on any violation of law

50. Assuming that it is not the first appointment of the auditor, who is responsible for the
appointment of the auditor?
a. The shareholders in a general meeting
b. The managing director
c. The board of directors in a board meeting
d. The audit committee
51. You have been proposed as auditor of a company. What is the first step that you
should take?
a. Obtain the client’s permission to communicate with the existing auditor
b. Obtain the existing auditor’s working papers
c. Obtain a copy of the company’s most recent board minutes
d. Obtain a copy of the existing auditor’s letter of engagement

52. Which one of the following may auditors NOT perform for their client?
a. Taking management decisions
b. Preparation of accounting records
c. Preparing tax computations
d. Advising on weaknesses in the internal control systems

53. Which of the following are fundamental ethical principles for professional accountants?
1 Competence
2 Compliance
3 Integrity
4 Objectivity
a. 1, 2 and 3 only
b. 1, 3 and 4 only
c. 2, 3 and 4 only
d. 1, 2 and 4 only

54. Which of the following statements is INCORRECT?

a. An auditor may serve on the board of directors of an audit client.
b. An auditor who is an immediate family member of the director of an audit client
must not be assigned to the audit team.
c. Purchasing goods from an audit client on normal commercial terms does not
create a threat to the auditor’s independence.
d. An auditor who was recently a director of an audit client must not be assigned to
the audit team for that client.

55. Who normally appoints the external auditors of a company?

a. Directors
b. Shareholders
c. Audit Committee
d. Senior management

56. Which of the following is NOT the responsibility of the auditor?

a. To provide an opinion on the truth and fairness of the financial statement
b. To conduct an audit in accordance to the International Standards on auditing
c. To express an opinion on the companies going concern status
d. To assess the accurateness of management assumption of going concern status
57. Persons disqualified to act as an auditor include the following EXCEPT:
a. A body corporate
b. A retired civil servant with Practising Certificate
c. A partner or employee or officer/servant of the Company
d. A person who has been disqualified to act as auditor of a subsidiary company

58. Which one of the following is not a duty of the auditor?

a. Duty to report to the company’s bankers
b. Duty to report to the members
c. Duty to sign the audit report
d. Duty to report on any violation of law

59. Which of the following is NOT a potential duty of an audit committee?

a. Review of financial statements
b. Review of shareholders register
c. Review of Internal Audit
d. Liaison with external auditors

60. One of the following is NOT relevant as to the qualities that an auditor must possess
a. Painstakingness
b. Tactfulness
c. Deceit
d. Courage

61. The audit committee should focus its activities on the following functions EXCEPT:
a. Reliability and accuracy of the financial information provided to management and external
users
b. any accounting or auditing concerns identified as a result of an audit
c. the appointment of a new director in replacing the outgoing director on account of age
d. the company’s compliance with legal and regulatory provisions.

62. In the audit of historical financial statements by Accounting firms, the

criteria used are
a. regulations of the Canada Revenue Agency.
b. generally accepted auditing standards.
c. generally accepted accounting principles.
d. regulations of the provincial securities commissions.

63. The auditor has considerable responsibility for notifying users as to whether or not the
statements are properly stated. This imposes upon the auditor a duty to
a. be equally responsible with management for the preparation of the financial
statements.
b. be a guarantor of the fairness in the statements.
c. be an insurer of the fairness in the statements.
d. provide reasonable assurance that material misstatements will be detected.

64. State any ONE main feature each member of The Institute of Chartered Accountants of your
Country must possess.
Integrity
Independence and objectivity
Confidentiality
Technical competence
Conformity with technical competence
Maintenance of accepted ethical conduct
Restraint on advertisement of technical ability and publicity.

65. The system by which the affairs of companies are directed and controlled by those charged
with the responsibility of managing them is known as....................................
Corporate Governance

66. Rules and regulations guiding the implementation of accounting and auditing functions
within an enterprise are embedded in ............................
Regulatory Framework

67. State TWO circumstances when the directors of a company can appoint an auditor.
First auditors and casual vacancy

68. Who is responsible for overall quality control on an audit engagement?

a. Audit engagement partner.
b. Audit engagement team.
c. Quality control reviewer.
d. Audit manager.

69. An auditor has a duty to:

a. inform shareholders of directors’ remuneration.
b. prepare the financial report for presentation to shareholders.
c. exercise reasonable care and skills
d. exercise perfect judgment.

70. Corporate governance procedures are primarily concerned with ensuring:

a. the company will not be sued by its shareholders for inappropriate behaviour.
b. the entity operates at high levels of efficiency and effectiveness.
c. all members of the board of directors attend all directors’ meetings.
d. All of the given answers are correct.

71. Which of the following persons is qualified to be a company auditor?

a. An employee of the company
b. A body corporate
c. A person who is indebted to the company for an amount exceeding GH¢1,000
d. A practicing chartered accountant
72. Normally, a company auditor is appointed by the
a. Central Government
b. Shareholders
c. Board of Directors
d. Company Law board

73. An auditor in a casual vacancy is appointed by the

a. Board of Directors
b. Shareholders
c. Central Government
d. Company Law board

74. A company auditor can be removed before expiry of his term by

a. Shareholders
b. Board of Directors
c. Central Government
d. State Government

75. Remuneration of a company auditor is fixed by the

a. Shareholders
b. Board of Directors
c. Central Government
d. Appointing authority

76. A company auditor, in general has to submit his report to

a. Shareholders
b. Board of Directors
c. Central Government
d. None of the above

77. Auditor, in general is an

a. Employee of the company
b. Agent of the company
c. Agent of the shareholders
d. None of the above

78. Which of the following is NOT a statutory right of the auditors of a limited company?
(1) A right to attend all directors’ meetings and receive all notices and communications
relating to such meetings.
(2) A right to speak at general meetings on any part of the business that concerns them as
auditors.
(3) A right to attend any general meeting and receive all notices and communications
relating to such meetings.
a. (1) only
b. (1) and (3)
c. (2) only
d. (2) and (3)